Aside from a few lucky individuals, most students finish their education with mounds of student loans. Student debt is increasing exponentially, and we are beginning to face the consequences of a financial crisis because of it. Individuals are struggling to get ahead in life because they are drowning in debt whether it be student loans credit card debt. Student loans prevent individuals from buying homes, cars, and having financial freedom. Alleviating this burden can help get recent grads back on their feet and allow them to move on with their life.
For those who did not get so lucky and have to pay off student debt, below are some tips and tricks to help you manage your loans.
Ahh the lovely grace period. So many people view it as their last time of freedom, but most do not take advantage of the hidden blessing: early payment without responsibility. Often times, lenders will give you a grace period which is a period of time after you graduate where you do not have to start paying back your loans. Students celebrate this period, but you should take full advantage of this period of time and start chipping away at your loans. Think about it, Let’s say your monthly payment is $300 and you have a 6-month grace period. If you start paying off your loans right away, you will have already reduced your payment by $1,800 by the time your grace period is over. You are that much closer to paying your loans off if you start early. Why wouldn’t you want to pay off your loans as fast as you can?
I know, I know, this Is probably not what you want to hear, but it is important to consider. In order to pay off your debt as quickly as possible, you might have to continue the ramen, roommate, low-cost living lifestyle for a few years. Saving as much money as you can on daily expenses and using it to pay more on your loans could be the difference between being debt-free in 5 years vs. 20 years.
If you cannot sacrifice quality meals and refuse to eat ramen or live with a roommate, you can always move back in with your relatives to save money and not go out to eat often. Eating out can be very expensive so giving up a few, if not all nights out for a period of time while you are trying to pay off loans. I understand it can be difficult to give up some of your social life, but you can always find cheaper outing options or free outings such as museums.
Basically, cutting costs in any way can help you pay off your student loans as fast as possible.
Budgeting yourself can make a huge difference because you can allocate your income and breakdown your spending to see where you can save money. I won’t go in depth here because there is an article dedicated to budgeting your life and money (https://www.northernpeakfinancial.com/blog/how-to-budget).
Be aware of other debts
Credit card debt is another huge debt students have once they have graduated so being able to balance student loans and credit card debt is necessary in order to have financial freedom. Making payments to all of your debts is crucial so that your interest on the loans is not adding up. There are many different strategies to paying off your debts which is discussed in another article on the blog (https://www.northernpeakfinancial.com/blog/paying-off-debt).
Make more money
Earning more money can help you step out from the college lifestyle and still be able to pay off your loans quickly. There are many ways you can earn more money and they can be creative. For example, you could pick up a few extra shifts or stay at work a little longer to bring in more money. If you are unable to work extra shifts or are on salary, you can look for a higher paying job or find a side job. Lastly, you can create a side hustle job to help you pay off your loans like a business or selling unwanted items from your home on websites. Whatever you decide to do to earn extra money, make sure you are using it to pay off your student loans rather than buying things.
If you feel as though you are in over your head with student debt you should reach out to a financial advisor to help you determine ways to pay off your loans. They can establish a budget that fits your life and set up a payment plan that works for you. With their guidance, you have the ability to get back on track and be able to afford major purchases such as a house or a car.
Financial planners are there to help you reach your financial goals and financial freedom. They take pride in your success and want to help you become debt free.